Name- Arijeet Majumdar, Roll- 1501005

Persuasive Essay on Fitness Center at Rocky Mountain Mutual Insurance Company

To: Mr. Zachary Evans, Vice President of Operations

From: Joseph Mirola
Date: 14/7/2015
Subject: Profit and benefits of having Company Fitness Center
Thank you for giving me the opportunity to explain the advantages of having companys own
fitness center. As I said to you in the meeting last week, I want to highlight the benefits of the
company fitness center both in tangible and intangible aspects. Company reports reveals that
the fitness center has led to an overall decrease in employee absenteeism, reduction in
employee medical bill as insurance and an increase in productivity at work. I did extensive
research about the value of the fitness center for the past eight months and did launch a new
wellness program to encourage employees to use the center during this time period and found
its great benefits from employee perspective as well as from company perspective. I will explain
my findings below and will try to respond to your concerns regarding the fitness center.
One of the main concern of last weeks meeting was cost. Just three years ago we invested
almost $1 million to build the fitness center. This cost has been shown as the substantial capital
expenditure in the balance sheet over the time. It would be unwise to shut it down now as we
have to allocate $333k as fixed costs for the past three years balance sheets. Shareholders
would not be happy because this fixed costs would not improve profits from the balance sheet
point of view. Also as the fitness center requires $100000 to be maintained annually, consider
the savings in medical costs, absenteeism and productivity which will eventually add value to
the company. Currently, out of 250 employees, 25 employees use the fitness center frequently,
62 employees use it occasionally and 163 users do not use it at all.

The average medical costs for non-users i.e. 65% of the employees are

$500/employee/year which is eventually $81500/year.

The average medical cost of the employees that work out 1-2 times a week which is
31% of the total employees is only $300, $200 less than the average non users saving
$18600/employee/year for the company.

Name- Arijeet Majumdar, Roll- 1501005

The average medical cost of the employees that work out frequently in a week which is
4% of the total employee is only 100$, $400 less than the average non users saving
$2500/employee/year for the company.

This tells us savings of $21100 annually for the current users of the facility alone. The more
employees use the facility center, the more we would be able to add to our companys savings.
The second concern that we have discussed in the meeting was low utilization of the fitness
facility among the employees. Since its inception three years ago, the fitness center is able to
attract 35% of the total employee base till date. These people are of early adopters group who
are already into fitness or were willing to get into it. We must now concentrate on attracting the
remaining employees on board to avail the fitness facility. In the last 8 months, I have introduced
a wellness program within my claims department to encourage increased participation. All my
department employees are beginning to use the center at least once a week. And it has
increased productivity by 18 percent, sick days have decreased by 5 percent. Similar policies
could be instituted company-wide, and I am sure we would see the similar results throughout
the company.
The third concern, in which we have different views in the meeting was that the fitness center is
not a necessary tool to be competitive for the new hires. I disagree with this concern most
fiercely. Our company is located in a remote suburban town, where there are few things that can
attract young employees. Also for the recreation of the 35 percent existing employees it is a very
important factor. The fitness center gives us an edge in terms of recruiting young, ambitious
employees to the area, since our competitors in the area do not have fitness centers.
Furthermore, there are no other fitness centers that are conveniently located near our company
headquarters. So if we close down the Fitness Center, there will be nowhere that our company
employees can go and their morale will suffer. Although we cannot measure morale in
productivity and ultimate profit but it is definitely a crucial factor to the success of any business
organization.
I hope that considering all the above points you strongly consider keeping the Fitness Center
because, in the long run, it will not only increase company profits and reduce insurance costs
but also it will be a value added feature for the employees.